Bankruptcy and Child Support Enforcement: Improved Information	 
Sharing Possible without Routine Data Matching (23-JAN-08,	 
GAO-08-100).							 
                                                                 
Recognizing the importance of child support, the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 requires that if a
parent with child support obligations files for bankruptcy, a	 
bankruptcy trustee must notify the relevant custodial parent and 
state child support enforcement agency so that they may 	 
participate in the case. The act also required GAO to study the  
feasibility of matching bankruptcy records with child support	 
records to assure that filers with child support obligations are 
identified. GAO therefore (1) identified the percent of 	 
bankruptcy filers with obligations nationwide, (2) examined the  
potential for routine data matching to facilitate the		 
identification of filers with child support obligations, and (3) 
studied the feasibility and cost of doing so. GAO interviewed	 
child support enforcement and bankruptcy officials at the federal
level and in six states. GAO also conducted a nationwide test	 
data match and reviewed national bankruptcy filings for people	 
with support obligations in Texas for an indication of whether	 
filers are failing to provide this information. 		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-100 					        
    ACCNO:   A80049						        
  TITLE:     Bankruptcy and Child Support Enforcement: Improved       
Information Sharing Possible without Routine Data Matching	 
     DATE:   01/23/2008 
  SUBJECT:   Bankruptcy 					 
	     Child support payments				 
	     Cost analysis					 
	     Data collection					 
	     Data integrity					 
	     Databases						 
	     Federal/state relations				 
	     Law enforcement					 
	     Noncompliance					 
	     Policy evaluation					 
	     Program evaluation 				 
	     Social security number				 
	     Strategic planning 				 
	     Data coordination					 
	     Data sharing					 
	     Program goals or objectives			 
	     DOJ U.S. Trustee Program				 
	     HHS Child Support Enforcement Program		 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-08-100

   

     * [1]Results in Brief
     * [2]Background

          * [3]The Bankruptcy System
          * [4]The Child Support Enforcement Program
          * [5]Bankruptcy Reform Act's Treatment of Child Support
          * [6]Notifying Custodial Parents and State Child Support Enforcem

     * [7]About 7 Percent of Those Who Filed for Bankruptcy Have Order
     * [8]A Routine, National Data Match Might Identify Filers Who Do

          * [9]A National Match of Federal Bankruptcy with Child Support En
          * [10]A Data Match Might Readily Provide State Agencies with Posit

     * [11]Although a Data Match Is Technically Feasible, There Would B

          * [12]A Data Match with Transmission of Results to State Agencies
          * [13]A Data Match Would Likely Involve Substantial Start-up Costs
          * [14]Officials of the Administrative Office Say That Their Curren

     * [15]Conclusion
     * [16]Recommendations for Executive and Judicial Branch Action
     * [17]Agency Comments and Our Evaluation
     * [18]Objectives
     * [19]Scope and Methodology
     * [20]GAO Contact
     * [21]Acknowledgments
     * [22]GAO's Mission
     * [23]Obtaining Copies of GAO Reports and Testimony

          * [24]Order by Mail or Phone

     * [25]To Report Fraud, Waste, and Abuse in Federal Programs
     * [26]Congressional Relations
     * [27]Public Affairs

Report to Congressional Committees

United States Government Accountability Office

GAO

January 2008

BANKRUPTCY AND CHILD SUPPORT ENFORCEMENT

Improved Information Sharing Possible without Routine Data Matching

GAO-08-100

Contents

Letter 1

Results in Brief 4
Background 6
About 7 Percent of Those Who Filed for Bankruptcy Have Orders to Pay Child
Support and Most Are Part of the CSE Program 13
A Routine, National Data Match Might Identify Filers Who Do Not Report
Their Support Obligations and Reduce the Workload Associated with the
Current Process 15
Although a Data Match Is Technically Feasible, There Would Be Substantial
Start-Up Costs as well as Some Policy Considerations 19
Conclusion 25
Recommendations for Executive and Judicial Branch Action 26
Agency Comments and Our Evaluation 27
Appendix I Objectives, Scope, and Methodology 30
Appendix II Comments from the Department of Justice 34
Appendix III GAO Contact and Staff Acknowledgments 35

Table

Table 1: Comparison of Bankruptcy Filers Who Are Noncustodial Parents with
Orders with All Bankruptcy Filers 14

Figures

Figure 1: Overview of Bankruptcy System 8
Figure 2: Current Court and Bankruptcy Case Trustee Notification Processes
12
Figure 3: Federal Parent Locator Service 21

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

Abbreviations

CSE Child Support Enforcement
DSO Domestic Support Obligation
EOUST Executive Office for U.S. Trustees
HHS Department of Health and Human Services
OCSE Office of Child Support Enforcement
SSN Social Security Number
TANF Temporary Assistance for Needy Families

United States Government Accountability Office
Washington, DC 20548

January 23, 2008

Congressional Committees

Millions of parents nationwide do not live with one or more of their minor
children. For many of these children and the households they live in,
child support payments from noncustodial parents can be an important
source of income. In fiscal year 2006 alone, almost $24 billion in child
support payments was collected and distributed through the federal/state
child support enforcement (CSE) program. In recognition of the importance
of child support to these families, the Bankruptcy Abuse Prevention and
Consumer Protection Act (also known as the Bankruptcy Reform Act)--which
was signed into law in April 2005 and addresses, among other things,
certain factors viewed as contributing to an escalation in bankruptcy
filings--included new provisions to help better ensure that child support
is given a high priority in bankruptcy. Millions of parents nationwide do
not live with one or more of their minor children. For many of these
children and the households they live in, child support payments from
noncustodial parents can be an important source of income. In fiscal year
2006 alone, almost $24 billion in child support payments was collected and
distributed through the federal/state child support enforcement (CSE)
program. In recognition of the importance of child support to these
families, the Bankruptcy Abuse Prevention and Consumer Protection Act
(also known as the Bankruptcy Reform Act)--which was signed into law in
April 2005 and addresses, among other things, certain factors viewed as
contributing to an escalation in bankruptcy filings--included new
provisions to help better ensure that child support is given a high
priority in bankruptcy.

Specifically, to help ensure that child support payments are made to
custodial parents, bankruptcy filers are to disclose their support
obligations on certain bankruptcy forms. The act amended the Bankruptcy
Code to require bankruptcy case trustees--generally private individuals
who are appointed by the federal government to administer individual
bankruptcy cases--to notify child support claimants, such as custodial
parents to whom support payments are owed by an individual filing for
bankruptcy, as well as state CSE agencies that might be involved. This is
designed to allow custodial parents and state CSE agencies to have an
opportunity to be party to any bankruptcy proceedings. Nationwide, most
parents with child support orders receive child support enforcement
services through state CSE agencies while the remainder rely on private
arrangements. Specifically, to help ensure that child support payments are
made to custodial parents, bankruptcy filers are to disclose their support
obligations on certain bankruptcy forms. The act amended the Bankruptcy
Code to require bankruptcy case trustees--generally private individuals
who are appointed by the federal government to administer individual
bankruptcy cases--to notify child support claimants, such as custodial
parents to whom support payments are owed by an individual filing for
bankruptcy, as well as state CSE agencies that might be involved. This is
designed to allow custodial parents and state CSE agencies to have an
opportunity to be party to any bankruptcy proceedings. Nationwide, most
parents with child support orders receive child support enforcement
services through state CSE agencies while the remainder rely on private
arrangements.

The ability to identify bankruptcy filers who have child support
obligations is essential for many of the new provisions in the act to
work. While the federal bankruptcy system and the CSE program have
national databases, none identify bankruptcy filers who owe or pay child
support. The Bankruptcy Reform Act, therefore, required that we study and
report on the feasibility, effectiveness, and cost of identifying such
filers through The ability to identify bankruptcy filers who have child
support obligations is essential for many of the new provisions in the act
to work. While the federal bankruptcy system and the CSE program have
national databases, none identify bankruptcy filers who owe or pay child
support. The Bankruptcy Reform Act, therefore, required that we study and
report on the feasibility, effectiveness, and cost of identifying such
filers through database matching of bankruptcy records with child support
enforcement records.^1 (The names of addressees are listed at the end of
this letter.)

To respond to this statutory requirement, we addressed the following
questions: (1) What percent of bankruptcy filers are parents who have
orders to pay child support? (2) In what ways, if any, might matching of
national bankruptcy and child support enforcement data on a routine basis
facilitate the identification of bankruptcy filers with orders to pay
child support? (3) What is the feasibility and estimated cost of
conducting such a data match on a routine basis?

To address these objectives, we used several different methodologies. To
identify the percent of bankruptcy filers with orders to pay child
support, we worked with the U.S. Department of Health and Human Services'
(HHS) Office of Child Support Enforcement (OCSE)--the entity overseeing
state CSE agencies^2--to match its national child support enforcement data
with a national extract of data on bankruptcy filers that we obtained from
the Administrative Office of the United States Courts (Administrative
Office). The Administrative Office provides support for federal courts and
is supervised by the Judicial Conference of the United States. The HHS
data comprised all parents in its national-level database with current
orders to pay child support as of June 29, 2007, and the Administrative
Office data comprised all individuals that filed for consumer bankruptcy
between October 17, 2005, and October 17, 2006,^3 the first year of
implementation under the Bankruptcy Reform Act.^4 For more information on
scope and methodology, see appendix I.

To determine in what ways matching bankruptcy and child support data might
facilitate the identification of bankruptcy filers with child support
obligations as well as to assess the feasibility and estimated costs of
matching on a recurring basis, we interviewed officials in both the
federal/state CSE program and bankruptcy system. We interviewed officials
at OCSE as well as officials at state agencies in Alabama, California,
Illinois, New York, Texas, and West Virginia. We chose these six states
for their diverse geography, caseload sizes, and administrative
structures. More specifically, to illustrate whether a routine match could
facilitate the identification of bankruptcy filers who fail to report
their child support obligations, we conducted a match of national
bankruptcy filings with child support enforcement data from the Texas
state CSE agency to identify all bankruptcy filers between October 17,
2005, and October 17, 2006, who had a child support order in Texas open at
any time during this same time period.^5 Using the matched results, we
then reviewed publicly accessible bankruptcy files of a simple random
sample of 100 to determine whether they had reported their child support
obligation in their bankruptcy filing. The results of this case study
cannot be generalized nationwide; however, they can be generalized to the
population of 1,931 noncustodial parents who filed for bankruptcy
nationwide and also had child support orders in Texas.

^1 Pub. L. No. 109-8, S 230, 119 Stat. 23, 72 (2005). The Bankruptcy
Reform Act was signed into law on April 20, 2005, and most of its
provisions became effective on October 17, 2005.

^2 Each of the 50 states, the District of Columbia, Puerto Rico, the U.S.
Virgin Islands, and Guam administers a CSE program. Hereafter, we will
refer to these 54 CSE agencies as "state agencies."

^3 We determined that the differences in dates were not a significant
limitation for our purposes. See appendix I for more information about
this issue.

^4 Because businesses do not pay child support, the scope of this report
is limited to individuals filing under Chapter 7 or 13, which are the
bankruptcy chapters under which individuals usually file.

We assessed the reliability of both the bankruptcy and child support
enforcement data by reviewing documentation about the systems that
produced them, interviewing agency officials knowledgeable about the data,
and performing electronic testing of the relevant data elements. Because
HHS conducted the test match of the bankruptcy data and national child
support enforcement data itself, we were unable to conduct electronic
testing as a part of our data reliability assessment. However, HHS
performed the analysis to meet certain specifications we provided and
included some information to allow us to assess the work performed. We
determined that these data were sufficiently reliable for the purposes of
this report.

Additionally, we interviewed officials of the executive branch's United
States Trustee Program at the Department of Justice and the judicial
branch's Bankruptcy Administrator Program, which share responsibility for
bankruptcy case trustees. For the U.S. Trustee Program that covers
bankruptcy districts in all but two states, we talked with officials from
the Executive Office for U.S. Trustees (EOUST) and 5 regional U.S.
Trustees as well as 15 bankruptcy case trustees participating in this
program in five of the states we selected. Separate from the U.S. Trustee
Program, the judicial branch Bankruptcy Administrator Program has
bankruptcy administrators who operate in the remaining two states (Alabama
and North Carolina) who perform duties similar to those of the U.S.
Trustees, including maintaining a panel of private bankruptcy case
trustees. In Alabama, we interviewed one bankruptcy administrator and one
case trustee who reports to this bankruptcy administrator.

^5Among the six states we contacted for this review, Texas was able to
provide us with a relevant extract of their child support caseload.

We conducted this performance audit from December 2006 to January 2008
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.

Results in Brief

A data match between bankruptcy and child support data found that about
7.2 percent of the 628,537 individuals who filed for bankruptcy nationwide
between October 17, 2005, and October 17, 2006, the first year of the
Bankruptcy Reform Act's implementation, were noncustodial parents with
orders to pay child support. They, in turn, represented about one-half of
1 percent of the 9.9 million noncustodial parents with orders to pay child
support. While these proportions are small, they nevertheless represented
45,346 adults and at least as many children. About three-quarters (33,958)
of these noncustodial parents received services through the CSE program in
various states and the remainder relied on private arrangements. Of the
bankruptcy filers with child support orders served through the CSE
program, at least one-half were past due on their child support payments.

A national bankruptcy and child support data match conducted on a
recurring basis might facilitate the identification of additional filers
with child support orders than through the current notification process
and reduce the state agency workload associated with processing paper
notices received from bankruptcy case trustees. Based on our review of a
random sample of national bankruptcy filings involving child support cases
in Texas, we estimate that 2 percent (the 95-percent confidence interval
ranges from less than 1 percent to 7 percent) may not have reported their
child support obligations in their bankruptcy paperwork. (The results
could be higher or lower in other states.) This suggests that matching
between bankruptcy and child support data could provide a check on filers'
child support status when not self-reported, although in this particular
case we found that almost everyone had reported their obligation. In
addition, the results of a data match would reduce the workload for state
agencies by providing positive identification of bankruptcy filers with
child support orders under the states' purview by comparing the full SSNs
of individuals in both databases. This step would allow state agencies to
more quickly and accurately identify relevant individuals in their
records. Officials at the six state agencies we reviewed said the notices
they receive from bankruptcy case trustees do not always include the full
9-digit SSNs of the bankruptcy filers. In three of these states, officials
estimated that about half or more of the notices they received contained
only partial SSNs. According to state officials, this results in more work
for staff to locate the individuals in their databases that use SSNs as
key identifiers. The regional U.S. and case trustees as well as a
bankruptcy administrator we spoke with said that some case trustees do not
provide the full number for a variety of reasons, a few related to
privacy. For case trustees participating in the U.S. Trustee Program, we
found this to be the case, even though EOUST guidance--covering 84 of the
90 bankruptcy districts--calls for case trustees to provide the full SSN
in notices sent to state agencies. EOUST officials told us they do not
have authority to directly require individual case trustees to provide the
number in full, but that they did develop trustee guidance for doing so
following their discussions with OCSE about the importance of the full SSN
for effective processing of notices by state agencies. The EOUST officials
noted that the use of full SSNs in these notices, which are not part of
any public record, is consistent with executive branch policies designed
to guard privacy. For the judicial branch Bankruptcy Administrator Program
in the remaining six bankruptcy districts, which are in Alabama and North
Carolina, some case trustees also do not provide the full SSN of filers in
the notices to the state agency. Neither the Judicial Conference nor the
Administrative Office has developed guidance for these case trustees on
notifications.

A national data match done on a recurring basis is technically feasible,
but would be a complex and costly undertaking, and is also accompanied by
certain statutory and policy considerations. Regarding technical
feasibility, both the federal bankruptcy system and the CSE program use
full SSNs as key identifiers in their automated systems that could be used
to match bankruptcy filers with individuals who have child support orders,
as our one-time data match demonstrated. With regard to notifying state
agencies of the match results, OCSE officials said that HHS' national
automated system could disseminate this information after modifications to
federal and state systems. Although data sharing across government
agencies is not uncommon, the modifications it requires to systems are
costly, involving many steps for effective development, implementation,
and maintenance. Overall, OCSE officials estimate that their development
costs to conduct this match would be between $2 million and $2.5 million
and would take between 15 and 18 months to implement. Another factor that
could affect cost is the possible duplication of efforts. Bankruptcy and
CSE program officials expressed concern that using an automated system for
notifying state agencies would duplicate the current Bankruptcy Code
requirement for case trustees to send notices to relevant state agencies.
In addition, there is no existing mechanism that could readily be used or
modified to notify custodial parents based on match results; like state
agencies, custodial parents currently receive mailed notifications from
case trustees. Bankruptcy officials from the Administrative Office and
EOUST also cited some statutory and policy considerations with sharing
data for matching purposes that would need to be addressed for matching on
a recurring basis to take place. For example, officials at the
Administrative Office cited a policy against releasing and disseminating
its bankruptcy data to OCSE on the grounds that the judicial branch must
remain an independent and objective adjudicator of creditor claims.

While matching federal bankruptcy data with child support records on a
recurring basis might afford some modest improvements to the current
system, it is not clear that instituting a routine data matching system is
warranted, given the costs, efforts, and policy considerations that would
be involved. However, improved information sharing appears possible with
additional attention to the existing process for notifying state agencies.
As a result, we recommend that the Attorney General direct the Director of
the Executive Office for U.S. Trustees to more actively encourage
bankruptcy case trustees to provide state agencies with full SSNs, while
recognizing the need to do so in a manner that preserves the security of
the information. In addition, we recommend that the Judicial Conference of
the United States work with bankruptcy administrators in the six
bankruptcy court districts in Alabama and North Carolina to examine
whether case trustees should provide state agencies with the full SSNs of
bankruptcy filers. In responding to a draft of this report, officials of
the U.S. Trustee Program at Justice and officials from the Administrative
Office of United States Courts, which work with the bankruptcy
administrators in Alabama and North Carolina, said they would take steps
to address the recommendations.

Background

Bankruptcy is a federal court procedure designed to help both individuals
and businesses address debts they cannot fully repay as well as help
creditors receive some payment in an equitable manner. Individuals usually
file for bankruptcy under one of two chapters of the Bankruptcy Code.
Under Chapter 7, the filer's eligible nonexempt assets are reduced to cash
and distributed to creditors in accordance with distribution priorities
and procedures set out in the Bankruptcy Code. Under Chapter 13, filers
submit a repayment plan to the court agreeing to pay part or all of their
debts over time, usually 3 to 5 years. Upon the successful completion of
both Chapter 7 and 13 cases, the filer's personal liability for eligible
debts is discharged at the end of the bankruptcy process, which means that
creditors may take no further action against the individual to collect the
debt. Child support is not a debt eligible for discharge.

The Bankruptcy Reform Act, among other things, amended the Bankruptcy Code
to require those filers with the ability to pay some of their debts to
enter into repayment plans under Chapter 13 of the Bankruptcy Code instead
of liquidating their assets under Chapter 7 and granting the debtor a
discharge from eligible debts. During the first year of implementation
under the Bankruptcy Reform Act, about 628,537 individuals filed for
bankruptcy, based on the Administrative Office bankruptcy data we used for
our national data match.

The Bankruptcy System

The bankruptcy system is complex and involves many entities in the
judicial and executive branches of the federal government. (See fig. 1.)

Figure 1: Overview of Bankruptcy System

a While not shown in this graphic, the Judicial Branch oversees case
trustees in a small number of bankruptcy court districts.

Within the judicial branch, 90 federal bankruptcy courts have jurisdiction
over bankruptcy cases. The Administrative Office is the central support
entity for federal courts, including bankruptcy courts, providing a wide
range of administrative, legal, financial, management, and information
technology services. It also maintains the U.S. Party/Case Index, which
contains information collected from all 90 federal bankruptcy courts and
allows courts to identify parties involved in federal litigation almost
anywhere in the nation. The Director of the Administrative Office is
supervised by the Judicial Conference of the United States. The Judicial
Conference also considers administrative problems and policy issues
affecting the federal judiciary and makes recommendations to Congress
concerning legislation affecting the federal judicial system.

The bankruptcy courts share responsibility for bankruptcy cases with the
United States Trustee Program, which is part of the executive branch's
U.S. Department of Justice (Justice). In all but six bankruptcy court
districts in Alabama and North Carolina, the U.S. Trustee Program is
responsible for appointing and supervising private bankruptcy case
trustees who manage many aspects of individual bankruptcy cases.^6 The
Executive Office for U.S. Trustees at Justice provides general policy and
legal guidance, oversees operations, and handles administrative functions
for the U.S. Trustee Program. It also manages the Automated Case
Management System, which functions as the U.S. Trustee Program's system
for administering bankruptcy cases. Separate from the U.S. Trustee
Program, the remaining six districts have judicial branch bankruptcy
administrators (referred to as the Bankruptcy Administrator Program) who
perform duties similar to those of the U.S. Trustees, including overseeing
the administration of bankruptcy cases, maintaining a panel of private
case trustees, and monitoring the transactions and conduct of parties in
bankruptcy in those states.

The Child Support Enforcement Program

The federal government partners with states to operate the child support
enforcement program, making available to parents a range of child support
services, including establishing and enforcing child support orders. A
child support order can be entered into voluntarily, ordered by a court,
or established by a state agency through an administrative process. Once
established, it generally legally requires a noncustodial parent to
provide financial support to a custodial parent with at least one child.

Nationwide, almost 10 million noncustodial parents had child support
orders in place in June 2007, based on the Federal Case Registry
maintained by OCSE. This registry, part of the Federal Parent Locator
Service,^7 contains information about individuals with child support cases
and orders administered by state CSE agencies as well as individuals not
part of the CSE program, but who had orders established after 1998. About
78 percent of these 10 million noncustodial parents had orders enforced
through state CSE agencies; the remaining parents are not involved with a
state agency in enforcing their orders.

^6 Pursuant to the Bankruptcy Judges, United States Trustees, and Family
Farmer Bankruptcy Act of 1986 (Pub. L. No. 99-554, 100 Stat. 3088 (1986)),
the Judicial Conference established the bankruptcy administrator program
in these two states as a part of the federal judiciary.

^7 The Federal Parent Locator Service is a national system to assist
states in locating noncustodial parents and custodial parties to establish
paternity and child support orders; enforce and modify orders; and
identify orders or cases involving the same parties in different states.

The CSE program makes services available, upon request, to any parent or
other person with custody of a child (custodial parent) who has a parent
living outside of the home (noncustodial parent). Parents that receive
public assistance through the Temporary Assistance for Needy Families
(TANF), Medicaid, and Foster Care programs receive CSE services free;
others are charged a nominal fee not to exceed $25. TANF recipients are
required to assign their rights to child support payments to the state. In
fiscal year 2006, the state CSE agencies administered 15.8 million cases,
providing a range of services, including establishing paternity and
support orders, locating noncustodial parents, collecting and distributing
child and medical support, and reviewing and modifying support orders.

The majority of child support is collected through wage withholding, but
state agencies also use other methods for enforcing child support orders.
In 2006, about 69 percent of child support payments were collected through
wage withholding, which involves employers withholding support from
noncustodial parents' wages and sending it to the appropriate state agency
for distribution. Other methods include intercepting federal and state
income tax refunds; liens against property; as well as withholding or
suspending driver's licenses, professional licenses, recreational and
sporting licenses, and passports of persons who owe past-due support.
During fiscal year 2006, total distributed collections were almost $24
billion. Program costs for that year totaled $5.6 billion, of which $3.7
billion was federally funded.

State agencies administer the CSE program, but the federal government
plays a major role in supporting them. At the federal level, OCSE within
the Administration for Children and Families of HHS provides a majority of
program funding. It also establishes enforcement policies and guidance,
provides state agencies with technical assistance, and oversees and
monitors state programs.

Bankruptcy Reform Act's Treatment of Child Support

The Bankruptcy Reform Act included new provisions to help better ensure
that noncustodial parents who file for bankruptcy continue paying child
support and that child support payments are given a high priority in
bankruptcy. One of these provisions clarifies that proceedings to
establish or modify a domestic support obligation (e.g., child support)
owed to a governmental unit (e.g., state CSE agencies) are exempt from the
automatic stay. An automatic stay bars creditors from taking measures to
collect a debt pending resolution of the bankruptcy proceeding. Another
provision allows for the continued operation of wage withholding for
domestic support obligations (e.g., child support). Further, the
Bankruptcy Reform Act, for example, requires that noncustodial parents
filing for Chapter 13 bankruptcy must be current on their child support
obligations to confirm a repayment plan. In addition, the Bankruptcy
Reform Act provides child support with the first priority for payment of
unsecured claims, up from a seventh-level priority under previous
Bankruptcy Code provisions.

Notifying Custodial Parents and State Child Support Enforcement Agencies of
Bankruptcies

The Bankruptcy Code requires bankruptcy filers to submit a list of their
creditors, which could include a custodial parent or state CSE agency, in
their financial disclosures. The court, in general, is to provide listed
creditors with notice of a meeting of creditors. A filer who knowingly and
fraudulently conceals a debt owed to a creditor is subject to criminal
penalties.

In addition, the Bankruptcy Reform Act amended the Bankruptcy Code to
require that child support claimants, such as custodial parents and state
agencies, be specifically notified of the bankruptcies of parents having a
domestic support obligation (DSO), a designation that includes child
support and alimony. Case trustees are to send notices of the bankruptcy
case to these parties after bankruptcy filers report in their paperwork
that they have a DSO. Figure 2 shows court and trustee notification
processes based on law, regulations, and guidelines.

Figure 2: Current Court and Bankruptcy Case Trustee Notification Processes

State agencies and custodial parents benefit from knowing about the
bankruptcies of parents who owe child support. The notice to the custodial
parent provides information about the state agency and his or her right to
use its services. Knowing about the bankruptcy of a noncustodial parent is
important so that the state agency or custodial parent can participate in
and be a party to pertinent bankruptcy proceedings. Knowing about the
bankruptcy also helps state agencies avoid violating any automatic stay
that may be in place. Although the CSE program may continue using many of
its collection tools, such as wage withholding, a few of these tools are
still subject to the automatic stay. According to a state official,
agencies can face penalties if they collect funds using tools subject to
the automatic stay.

About 7 Percent of Those Who Filed for Bankruptcy Have Orders to Pay Child
Support and Most Are Part of the CSE Program

Our data match using the national bankruptcy and OCSE data found that
among the 628,537 individuals who filed for bankruptcy between October 17,
2005, and October 17, 2006, the first year of implementation of the
Bankruptcy Reform Act, about 7.2 percent were noncustodial parents with
orders to pay child support. This population represents just one-half of 1
percent of the 9.9 million noncustodial parents who have orders to pay
child support. While these proportions are small, they nevertheless
represent 45,346 adults with orders to pay child support and at least as
many children.

About three-quarters (33,958) of bankruptcy filers with orders to pay
support were receiving services from CSE programs in various states.^8 At
least half of these bankruptcy filers were past due on their payments.^9
While data obtained for our study did not include the past due amounts
owed by these parents, fiscal 2004 data reported by OCSE, the most recent
available, show that of all noncustodial parents with orders who are part
of the CSE program, the average total past due amount owed was about
$9,400.

A greater number of noncustodial parents filed for Chapter 7 than Chapter
13 bankruptcy. Nevertheless, proportionally more noncustodial parents
filed for bankruptcy under Chapter 13 than did all filers (see table 1).
Several experts on bankruptcy and child support as well as officials in
some state agencies said the state agency is likely to play a role in
Chapter 13 filings because under this chapter an individual repays some or
all debt under a court-approved plan prior to a discharge. Past due child
support is a debt that can be included in the repayment plan and state
agencies may opt to continue collecting past due support through the state
agency enforcement process or through the Chapter 13 repayment plan. In
contrast, a large majority of filers under Chapter 7 have no assets
available for liquidation, and thus no funds are available to pay
creditors. Regardless of which chapter a noncustodial parent files under,
collection of ongoing child support would continue if, for example, the
filer had income and a wage withholding order in place.

^8 The 45,346 adults are all noncustodial parents with child support
orders in the Federal Case Registry while the 33,958 represents only those
noncustodial parents with "IV-D" orders associated with parents receiving
services from the CSE program, which is administered under Title IV-D of
the Social Security Act.

^9 This figure is based on the 17,146 filers identified in a separate
match HHS conducted for us with the Federal Offset Program file, which
only includes noncustodial parents with IV-D orders who owe past due child
support. This file only includes parents with arrearages that meet minimum
threshold amounts.

Table 1: Comparison of Bankruptcy Filers Who Are Noncustodial Parents with
Orders with All Bankruptcy Filers

                          Bankruptcy filers who are also                      
Bankruptcy chapter   noncustodial parents with orders Allbankruptcy filers 
Chapter 7                                54% (24,462)        58% (363,321) 
Chapter 13                               46% (20,884)        42% (266,754) 
Total                                   100% (45,346)     100% (630,075)^a 

Source: GAO analysis based on a match of the Administrative Office's
bankruptcy data and HHS' CSE data.

Note: The table is based on noncustodial parents who filed between October
17, 2005, and October 17, 2006.

aThis total double-counts the 1,538 individuals who filed for both Chapter
7 and Chapter 13 bankruptcy in order to provide ratios for noncustodial
parents who filed for each chapter.

Although our study does not focus on custodial parents who are owed child
support and who filed for bankruptcy, our match showed that a slightly
higher percentage of bankruptcy filers were custodial parents than
noncustodial parents. Specifically, custodial parents represented 10
percent of all those who filed for bankruptcy while noncustodial parents
represented 7 percent.^10

^10 We also found that of all custodial parents with child support orders
in place that establish their legal right to child support, 0.7 percent
filed for bankruptcy compared with about 0.5 percent for noncustodial
parents. Moreover, of all custodial parent bankruptcy filers with orders,
80 percent are part of the CSE program compared with 78 percent for
noncustodial parents. Finally, of all custodial parent bankruptcy filers
with orders, 56 percent filed for Chapter 7 while 44 percent filed for
Chapter 13.

A Routine, National Data Match Might Identify Filers Who Do Not Report Their
Support Obligations and Reduce the Workload Associated with the Current Process

A national match of bankruptcy data with child support enforcement data
conducted on a recurring basis might help identify filers who, for one
reason or another, fail to report their child support obligations in their
bankruptcy paperwork. The results of such a match would also reduce the
research workload for state agencies by providing positive identification
of bankruptcy filers with orders under the states' purview by comparing
the full SSNs of individuals in both databases. This step would allow
state agencies to more quickly and accurately identify the relevant
individuals in their records. Currently, some case trustees do not include
the full SSN of the filer in their notifications to the state agencies,
which imposes additional work on the state agency staff to make a positive
identification. For case trustees in all but six bankruptcy districts in
two states, guidance calls for them to provide full SSNs in the notices
they send to state agencies.

A National Match of Federal Bankruptcy with Child Support Enforcement Data Might
Identify Some Filers Who Do Not Report a Child Support Obligation

Conducting a national bankruptcy and child support enforcement data match
on a recurring basis might identify some additional filers who have orders
to pay child support but who do not report this obligation, as required,
when they file for bankruptcy. In a test review of bankruptcy filings
involving orders to pay child support in Texas, we found that an estimated
2 percent of filers who completed all of their bankruptcy paperwork may
not have reported their child support obligations.^11 (The results could
be higher or lower in other states.) For these and other filers who fail
to report their obligations in their paperwork, they may subsequently
report these obligations at a later stage in the bankruptcy process when
case trustees ask them under oath whether they have a domestic obligation.
Almost all of the 16 case trustees we spoke with for this review said they
always ask debtors this question under oath.^12

^11 The 95 percent confidence interval for this estimate ranges from less
than 1 percent to over 7 percent, which means we are 95 percent confident
that this interval contains the true values in the study population. It is
possible that we identified some individuals as non-reporters due to a
timing issue rather than their not disclosing a current obligation. While
we attempted to match the time frames of the bankruptcy and child support
data as closely as possible, it is possible that an individual's child
support status on the exact date that they filed for bankruptcy might not
have been captured in our data match.

^12 Administrative Office officials told us that in the event that a filer
has for some reason initially not listed a creditor and the case trustee
has knowledge of this, the case trustee should require the filer to amend
the bankruptcy paperwork.

A Data Match Might Readily Provide State Agencies with Positive Identifications
and Reduce the Workload Associated with the Current Trustee Notification Process

A data matching process in which OCSE conveys results to state agencies
that positively identify bankruptcy filers would allow state agencies to
process the information more efficiently and accurately than the current
process, reducing state agency workload. State agency officials reported
that their staff currently take steps when they receive notices from case
trustees to determine whether the named individual is in their agency's
database.^13 A significant portion of the notices a state agency receives
may pertain to noncustodial parents who are not part of that state's CSE
program. For example, our national data match analysis identified about
one-quarter of noncustodial parent filers with orders not administered as
part of any state agency. Match results distributed to state agencies by
OCSE would, in effect, pre-sort the orders, only sending to state agencies
the information on bankruptcy filers whose orders are under their purview.
Also, agency staff can have difficulty distinguishing among the
noncustodial parents in their caseload with similar names when the notices
do not contain the full SSNs. Federal agencies often use full SSNs when
data matching or other information-sharing is used to help them meet
program goals, such as improving collections or minimizing fraud, as long
as they take the required steps to safeguard the personally-identifiable
information in their possession.

We found that it is not always the practice for case trustees to include
full SSNs in their bankruptcy notices to state agencies, even though some
guidance has been issued on this. In our selected six states, state agency
officials said that trustee notices did not always contain full SSNs. In
Alabama, Illinois, and New York, for example, agency officials estimate
that half or more of the trustee notices they receive contain the filer's
partial SSN. Of the 16 case trustees we interviewed, 5 said they do not
include the full SSN in the notices they send to state agencies. Four of
these five case trustees participating in the U.S. Trustee Program
expressed a variety of reasons for not providing full SSNs, such as
administrative convenience or some concerns about privacy,^14 despite
EOUST guidance instructing them to do so. In Alabama, where a bankruptcy
administrator rather than a regional U.S. Trustee oversees case trustees,
a trustee and the bankruptcy administrator said that their policy is to
provide only a partial SSN to the custodial parent and state agency.

^13 Our work at the state agencies focused on the notices they receive
from case trustees under the new DSO provisions of the Bankruptcy Reform
Act rather than the notices they receive pursuant to the more general
requirement that a bankruptcy court send a notice of a meeting of
creditors to all creditors specified in bankruptcy filings.

^14 Regarding administrative convenience, one trustee noted that she
relied on one pre-formatted letter for sending the notifications to
custodial parents and state agencies. This letter was formatted for
custodial parents, who are not to receive the bankruptcy filer's full SSN.
This was considered easier than having two separate letter formats--one
for custodial parents and another for state agencies--although it resulted
in the full SSN not being provided to state agencies.

In developing guidance for trustee noticing under the U.S. Trustee
Program, EOUST officials told us that they worked closely with OCSE
regarding what information to include in the notices going to state
agencies. The guidance notes that state child support agencies have
requested that the notices identify bankruptcy filers by name and SSN. The
guidance also includes sample notices that trustees can use that indicate
that the full SSN should be included for notifying the state agencies.
EOUST officials told us that OCSE officials emphasized the importance of
the full SSN for effective processing of notices. EOUST officials also
said that providing the full SSN to state agencies is consistent with the
Bankruptcy Reform Act. In addition, EOUST officials said that they
provided training about the notices to case trustees, through the regional
U.S. Trustees, as part of training on all aspects of the new bankruptcy
reform provisions and posted the guidance on their external and internal
Web sites.

EOUST officials also said they had considered executive branch policies
about privacy and security of personal identifiers and determined that its
guidance was consistent with these policies. It is important to note that
the notices from case trustees are not made available to the public and
are not part of the bankruptcy case docket, which is publicly available.
Officials from state agencies said similarly that they do not make this
information in the notices publicly available. We have previously reported
that SSNs can be useful tools to enhance program integrity through data
matching; however, government agencies and courts need to take steps to
prevent the improper disclosure of SSNs, including limiting the use and
display of SSNs in public records (e.g., SSN truncation in all lien
records).^15

While EOUST officials acknowledged the importance of full SSNs in notices,
they told us that they do not have authority to require case trustees to
provide them. They said that case trustees are not directly supervised by,
or employees of, EOUST. The EOUST officials also said that case trustees
are required to administer a bankruptcy estate in accordance with
applicable state laws.

^15 For a fuller discussion of these issues, see the following GAO
products: Social Security Numbers: Federal and State Laws Restrict Use of
SSNs, yet Gaps Remain, [28]GAO-05-1016T (Washington, D.C.: Sept. 15,
2005); and Social Security Numbers: Federal Actions Could Further Decrease
Availability in Public Records, though Other Vulnerabilities Remain,
[29]GAO-07-752 (Washington, D.C.: June 15, 2007).

For case trustees who are overseen by judicial branch bankruptcy
administrators in the six bankruptcy districts in Alabama and North
Carolina, neither the Judicial Conference nor the Administrative Office
has established an explicit policy about case trustees providing the
filer's full 9-digit SSN in the notices sent to custodial parents and the
state child support enforcement agencies.

In addition to reducing state agencies' workload, a routine data match
would have the additional advantage of identifying those parents who may
be part of the CSE program, but whose cases are administered by an agency
in another state.^16 In some cases the notices could go to the wrong state
because the Bankruptcy Reform Act requires that notices be sent to the
state in which the child support claimant, such as a custodial parent,
lives, although some may live in a state other than the one administering
CSE services. Also, more than one state may be involved in some case
activity. For example, according to OCSE officials, a January 2000
national analysis showed that, of noncustodial parents with orders to pay
child support, and who were past due on their payments, 24 percent resided
in a state other than the state seeking collection of these payments.

^16 A routine data match could also help state agencies locate
noncustodial parents identified by custodial parents but for whom a child
support order has not yet been established. While this would provide
useful information for child support enforcement, these parents would not
have formal child support obligations to report when they file for
bankruptcy.

Although a Data Match Is Technically Feasible, There Would Be Substantial
Start-Up Costs as well as Some Policy Considerations

A national data match conducted on a recurring basis is technically
feasible, although it would require modifications to existing systems at
national and state levels, including many steps for effectively developing
and implementing data matching that are costly. Moreover, bankruptcy and
CSE program officials expressed concern about implementing an automated
system that provides notification of noncustodial parent filers to state
agencies because of potential duplication between any new automated system
and the existing trustee notification process that was implemented as a
result of the Bankruptcy Reform Act. In addition to these costs,
bankruptcy officials cited some statutory and policy considerations to
releasing their own data or to performing a data match. Weighing these
factors and concerns against the benefits of conducting a data match is an
important consideration.

A Data Match with Transmission of Results to State Agencies Is Technically
Feasible, Though It Would Not Replace Notifications to Custodial Parents

Officials from the Administrative Office, EOUST, and CSE agencies said
that it is technically feasible to provide information in their databases
to the other system and then match records between the two systems on a
routine basis. They also brought up legal and policy considerations, which
we discuss in more detail later. The bankruptcy system and CSE program
each have federal databases that use SSNs as key identifiers and contain
the information that potentially can be used to identify, on a routine
basis, bankruptcy filers with orders to pay child support. Both the
Administrative Office and EOUST databases contain the full SSNs of filers
for consumer bankruptcies.^17 The EOUST database does not include
bankruptcy filers in Alabama and North Carolina because these two states
do not participate in the U.S. Trustee Program. OCSE maintains the Federal
Case Registry, a national automated system containing limited data of
noncustodial parents with orders to pay child support that are enforced
through state CSE programs and those that are not, among other
information. OCSE also maintains the Federal Offset Program file that
contains information on individuals who owe past due child support who are
part of the state CSE programs.

Using the Federal Case Registry and its other automated systems, OCSE
currently conducts routine data matches with other entities to help state
agencies locate parents and enforce child support orders. For example, the
registry helps state agencies identify noncustodial parents who are
located or working in other states. By matching its data with data held by
other agencies, such as the Social Security Administration, the Department
of Defense, the Federal Bureau of Investigation, and the Internal Revenue
Service, it can locate the parent's employer for state agencies, allowing
them to issue income-withholding orders, among other actions. Moreover, an
OCSE analysis estimated that its National Directory of New Hires Database
matches result in about $400 million in child support collected
annually.^18 Typically, OCSE conducts matches with entities that have
information common among many individuals in its target population or that
are expected to yield significant results. See figure 3.

^17 The Administrative Office's database is the U.S. Party/Case Index.
EOUST's database, the Automated Case Management System, is based on
extracts of case management information from the Administrative Office.

^18 Fiscal Year 2004 Annual Report to Congress, U.S. Department of Health
and Human Services. In addition to the Federal Case Registry, the Federal
Parent Locator Service includes the National Directory of New Hires: a
central repository of employment, unemployment insurance, and wage data
from State Directories of New Hires, State Employment Security agencies,
and federal agencies. Person data in the registry are matched daily
against employment data in the National Directory of New Hires.

Figure 3: Federal Parent Locator Service

With regard to using the results of a data match, current technical
capability differs among agencies. OCSE and some state agency officials we
spoke with said that OCSE's Federal Case Registry could disseminate this
information to the 54 state agencies after modifications to this system
and state systems. Upon receiving an electronic notification that a
noncustodial parent in their caseload has filed for bankruptcy, state
agencies would also be able to identify custodial parents in their
caseloads who are associated with these noncustodial parent filers.
However, notifying the custodial parent about the bankruptcy is not
currently part of the state agencies' or OCSE's duties. Also, these
agencies do not have much information on custodial parents who are not
part of their state CSE programs. Alternatively, case trustees could use
the match results to continue carrying out their statutorily required duty
to notify these parents. However, EOUST officials told us they would need
to build the capacity to transmit the match results from EOUST to case
trustees who participate in the U.S. Trustee Program.

A Data Match Would Likely Involve Substantial Start-up Costs and Would also
Duplicate a Part of the Current Notification System

Although electronic data sharing across government agencies is not
uncommon,^19 it can be a complex and costly undertaking. Data matching
would need to be done frequently (e.g., weekly) to be useful, according to
some state agency officials, and would likely involve developing automated
interfaces to exchange data effectively on a recurring basis. In
developing such systems, to reduce the risks to acceptable levels,^20
following and effectively implementing accepted best practices in systems
development and implementation (commonly referred to as disciplined
processes) is important. It would include at a minimum

           o defining the detailed requirements for the new or modified
           systems and interfaces, and
           o thorough and complete testing to determine that new or modified
           systems will work as intended.

Even when the agencies have effectively implemented the disciplined
processes necessary to reduce risks to acceptable levels, a framework is
needed to guide a data sharing project such as this. Specifically,
agencies generally enter into written agreements when they share
information for conducting data matches. Based on their experience, OCSE
officials estimate that developing such agreements generally requires many
months.

Officials from OCSE and EOUST believe that system modifications that would
precede data sharing would involve significant costs. They said, for
example, they would need to build an exchange method that would allow for
the secure exchange of data. Overall, OCSE officials estimate that their
development costs would be between $2 million and $2.5 million and would
take between 15 and 18 months to implement.

^19 See The Challenge of Data Sharing: Results of a GAO-Sponsored
Symposium on Benefit and Loan Programs, [30]GAO-01-67 (Washington, D.C.:
Oct. 20, 2000).

^20 These risks involve developing and deploying automated systems with
critical flaws (e.g., it does not satisfy the needs of the end user and
does not operate as intended), resulting in significant schedule slippages
or increased cost or both. For a discussion of risk, see GAO, DOD Business
Transformation: Preliminary Observations on the Defense Travel System,
[31]GAO-05-998 T (Washington, D.C.: Sept. 29, 2005); and DOD Business
Systems Modernization: Billions Continue to Be Invested with Inadequate
Management Oversight and Accountability, [32]GAO-04-615 (Washington, D.C.:
May 27, 2004).

Once a matching process is established, disseminating match results would
not be a cost-free proposition. EOUST officials said that it would take a
considerable effort to establish an internal process, either manual or
automated, for disseminating the match results to the case trustees. While
state agencies could accept match results from OCSE using an existing
system, OCSE officials said that this would require building this
capability into the state agencies' respective automated systems. States
would incur some of these up-front costs, according to these officials.
Additional costs may be incurred at the county level, with officials at
one state agency saying that counties, and not just the state, might need
to modify their systems to receive matched data.^21

Once the necessary interfaces and system changes have been developed and
effectively implemented, there are ongoing operation and maintenance costs
to consider. OCSE estimates annual costs of between $35,000 and $50,000,
depending on which entity conducts the match. These costs would include
computer processing time and staff resources for managing data
transactions. For example, EOUST currently employs two full-time staffers
to extract bankruptcy data weekly from the Administrative Office's
bankruptcy case database, and a data match between the bankruptcy system
and CSE program would likely involve staffing.^22

Some Administrative Office, EOUST, and CSE officials expressed concern
about implementing an automated system providing notification of
noncustodial parent filers to state agencies because of potential
duplication between any new automated system and the existing paper
system, which was implemented as a result of the Bankruptcy Reform Act. If
a new system duplicates the notices that state agencies now receive from
bankruptcy case trustees, it could add to their workload. That is, state
agencies would be receiving information about bankruptcy filers with child
support obligations from both trustees and OCSE unless the Bankruptcy Code
is amended.

^21 Thirteen states have county-operated programs, and five other states
reported having a combination of state-and county-operated programs.

^22 Costs for development and maintenance would also be incurred by
bankruptcy entities, although estimates of these potential costs were not
developed for us.

Overall, officials from several of the state agencies we talked with said
that while conducting electronic matching and sending the results to their
agencies could be useful to them, the costs might not warrant such a
match. Moreover, according to OCSE officials, state agency directors they
have communicated with about a potential data match have similarly noted
this trade-off.

Officials of the Administrative Office Say That Their Current Policy Does Not
Allow for a Data Match while Officials from Other Programs Say It Could Be
Acceptable

Officials from the Administrative Office said that their current policy
does not allow a data match while officials from EOUST and OCSE said that
a data match would be acceptable if the match met specific privacy
guidelines. Officials at the Administrative Office cited a policy against
releasing and disseminating their bankruptcy data to OCSE. This federal
judiciary policy specifically bars release of the names and SSNs of
bankruptcy filers to HHS on the grounds that the judicial branch must
remain an independent and objective adjudicator of creditor claims.
Administrative Office officials also noted that data on bankruptcy filers
is available at EOUST, which is responsible for managing bankruptcy cases
and ensuring compliance with applicable laws and procedures.^23

For their part, officials at EOUST stated that their policy on data
sharing is guided by the Privacy Act--the federal law governing federal
agencies' use and disclosure of records containing individuals' personal
information.^24 The officials said that EOUST's current policy
implementing the routine use exception of the Privacy Act does not support
a match with the system of records in which the bankruptcy data are kept,
because identifying bankruptcy filers with child support obligations is
not part of its mission. However, if OCSE requested the bankruptcy data
from EOUST and EOUST determined that this request falls within the law
enforcement agency exception of the Privacy Act, then EOUST officials said
that it could share its data with OCSE.

^23As noted previously, EOUST's database does not include bankruptcy
filers in Alabama and North Carolina. In addition, its database is based
on extracts of case management information from the Administrative Office.

^24 Under the Privacy Act of 1974 (5 U.S.C. 552a), a federal agency is
prohibited from disclosing any record that is contained in a system of
records to another agency without the prior written consent of the
individual to whom the record pertains. There are 12 exceptions to this
"no disclosure without consent" rule. The two pertinent to our discussion
are the routine use and law enforcement agency exceptions. The routine use
exception allows an agency to disclose information if its disclosure is
compatible with the purpose for which the information was collected, and
if the routine use was published in the Federal Register. The law
enforcement exception allows an agency to disclose information upon a
written request by the head of an agency for a civil or criminal law
enforcement activity authorized by law.

According to OCSE officials, it would be acceptable for OCSE data to be
matched with bankruptcy data and for OCSE to disseminate the results to
state agencies on a recurring basis. However, OCSE officials noted that
the match results could only be used for CSE program purposes. That is,
EOUST or the Administrative Office could perform a match using CSE data
and bankruptcy data and return the results to OCSE, but these entities
could not use the CSE data or match results for their own purposes, such
as sending match results to case trustees. With respect to sending match
results to custodial parents outside the CSE program, OCSE officials said
that OCSE would not be the appropriate entity to do this because it is
neither authorized nor funded to interact with these parents in this way.

Conclusion

While matching federal bankruptcy data with child support records might
facilitate the identification of some additional bankruptcy filers with
child support obligations and improve the current system for notifying
state agencies, these potential improvements seem modest in comparison to
the costs, efforts, and statutory and policy considerations involved in
implementing and maintaining a data matching system. As a result, it
appears that instituting a routine data matching system may not be
warranted. A relatively small percentage of bankruptcy filers have orders
to pay child support. In addition, a process is currently in place to
identify and notify custodial parents and state agencies of bankruptcy
proceedings, as called for under the Bankruptcy Reform Act. Moreover, a
data matching system with results transmitting electronically to state
agencies would not offer a comprehensive alternative to the trustee
notification system insofar as it would not transmit information to
custodial parents and would partially duplicate the trustee notification
process. Finally, legal and policy considerations would need to be
addressed to institute data matching between these two systems.

Although these challenges are not insurmountable and data matching can be
a useful tool, in this case, there is an alternative that should improve
information sharing between case trustees and state child support agencies
within the current system of trustee notices. Notwithstanding EOUST
guidance calling for case trustees to provide the full SSNs, some case
trustees only provide partial SSNs. Although EOUST cannot require case
trustees to provide the full SSN, its examination of the trustee
notification process might identify reasons for case trustees not
providing the full SSNs as well as measures to help encourage the
provision of full SSNs in notices to state agencies. Without EOUST more
actively encouraging case trustees to provide full SSNs, state agencies
may continue to experience more difficulties than necessary in
accomplishing the child support goals of the Bankruptcy Reform Act. While
neither the Judicial Conference nor the Administrative Office has
developed similar guidance for bankruptcy administrators, the same reasons
exist for state agencies having full SSNs, regardless of which program
supervises case trustees. These reasons warrant some examination of the
trustee notification process in the bankruptcy administrator districts.

Recommendations for Executive and Judicial Branch Action

To help improve the bankruptcy trustee notification process for state
child support enforcement agencies called for under the Bankruptcy Reform
Act, we are making two recommendations.

First, we recommend that the Attorney General direct the Director of the
Executive Office for U.S. Trustees to more actively encourage case
trustees to provide state agencies the full SSNs of bankruptcy filers.
This could be accomplished, for example, by working with case trustees to
identify and address any issues related to implementation of the current
guidance, such as lack of clarity in the guidance or concerns about
preserving the security of SSNs.

Second, we recommend that the Judicial Conference of the United States
work with bankruptcy administrators in the six bankruptcy court districts
in Alabama and North Carolina not subject to EOUST guidance to examine
whether case trustees should provide state agencies with the full SSN of
bankruptcy filers. This might be done in the following ways:

           o Inform bankruptcy administrators and the bankruptcy court judges
           in those six districts about the importance of including the full
           SSN, how this information would be used by state agencies if
           provided, and to do so in a way that preserves the security of the
           information.

           o Work with the bankruptcy administrators and bankruptcy court
           judges in those six districts to identify and if possible, address
           any issues or concerns, including the security of the information,
           related to the use of full SSNs in the notices.

Agency Comments and Our Evaluation

We provided Justice, the Administrative Office, and HHS with a draft of
this report for their review and comments. The U.S. Trustee Program at
Justice said that it supported the recommendation and would continue to
work with the private case trustees, including through their national
associations, to identify and address impediments to ensuring that full
SSNs are provided to state CSE agencies. Its written comments are included
in appendix II. Officials from the Administrative Office, in commenting
orally on the draft, said that in light of our recommendation, they would
review--in the bankruptcy districts in Alabama and North Carolina--the
entire process in place for notifying state CSE agencies to see if the
process is working correctly and take action as needed. They also provided
technical comments that we incorporated as appropriate. In addition, HHS
provided technical comments that we incorporated as appropriate.

We are sending electronic copies of this report to the directors of the
Administrative Office of United States Courts and the Executive Office for
U.S. Trustees at the Department of Justice; the Secretary of Health and
Human Services; appropriate congressional committees, and other interested
parties. We will also make copies available to others upon request. In
addition, the report will be available at no charge on GAO's Web site at
http://www.gao.gov. Please contact me at (202) 512-7215 if you have any
questions about this report. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Other major contributors to this report are listed in
appendix III.

Kay E. Brown
Acting Director, Education, Workforce, and Income Security Issues

List of Congressional Committees
List of Congressional Committees: 

The Honorable Robert C. Byrd: 
President Pro Tempore: 
United States Senate: 

The Honorable Nancy Pelosi: 
Speaker of the House of Representatives: 

The Honorable Max Baucus: 
Chairman: 
The Honorable Charles Grassley: 
Ranking Member: 
Committee on Finance: 
United States Senate: 

The Honorable Patrick J. Leahy: 
Chairman: 
The Honorable Arlen Specter: 
Ranking Member: 
Committee on the Judiciary: 
United States Senate: 

The Honorable John Conyers, Jr. 
Chairman: 
The Honorable Lamar Smith: 
Ranking Member: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Linda T. Sanchez: 
Chairwoman: 
The Honorable Chris Cannon: 
Ranking Member: 
Subcommittee on Commercial and Administrative Law: 
Committee on the Judiciary: 
House of Representatives: 

The Honorable Jim McDermott: 
Chairman: 
The Honorable Jerry Weller: 
Ranking Member: 
Subcommittee on Income Security and Family Support: 
Committee on Ways and Means: 
House of Representatives: 

The Honorable Adam B. Schiff: 
House of Representatives: 

Appendix I: Objectives, Scope, and Methodology

Objectives

The objectives of this report were to determine (1) What percent of
bankruptcy filers are parents who have orders to pay child support? (2) In
what ways, if any, might matching national bankruptcy and child support
enforcement data on a routine basis facilitate the identification of
bankruptcy filers who have child support obligations? (3) What is the
feasibility and estimated cost of conducting such a data match on a
routine basis?

Scope and Methodology

To conduct our work we reviewed relevant laws, rules and regulations, and
guidance that affect the bankruptcy process and child support enforcement
(CSE) program, including the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, Title IV-D of the Social Security Act, the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996,
and the Privacy Act. We also interviewed bankruptcy and CSE program
officials. This information was also used to review the national court,
bankruptcy, and the CSE data systems that might be used for a potential
recurring, national data match.

To identify the proportion of parents with orders to pay child support who
filed for bankruptcy nationwide, we worked with the U.S. Department of
Health and Human Services' Office of Child Support Enforcement (OCSE) to
develop an analysis plan. This plan outlined how they would match their
national CSE data with a national extract of personal bankruptcy filers
that we obtained from the Administrative Office of United States Courts
(the Administrative Office). The national CSE data from the Federal Case
Registry, as of June 2007, contained information about individuals who are
participants of the CSE program and individuals who are not participants
of the CSE program but had orders established after 1998 to pay child
support. The national CSE data also included data from the Federal Offset
Program file, which contains only current information about noncustodial
parents that participate in the CSE program who owe past due child
support. The bankruptcy data from the U.S. Party/Case Index included names
and Social Security numbers (SSNs) of all individuals that filed for
Chapter 7 or Chapter 13 bankruptcy between October 17, 2005, and October
17, 2006, the first year of implementation under the Bankruptcy Reform
Act.

We recognize that the difference in time frames for the bankruptcy and CSE
data could mean that we over-or under-counted individuals in this
population. For example, we may have under-counted if a noncustodial
parent's order ended in May 2007, but this noncustodial parent filed for
bankruptcy on August 1, 2006. However, we determined that this was not a
significant methodological limitation for the purposes of testing this
data match and our analysis.

From the Administrative Office we received 839,597 records of bankruptcy
case data. After cleaning the data, 642,709 records were left for our
work. Records were removed for the following reasons: missing SSN, bad SSN
(more or less than nine digits), text strings instead of SSN, duplicates,
and bankruptcy chapters other than 7 and 13. We had several communications
with the system administrators to clarify our reasoning before dropping
any records. We were told that although the system has data checks there
is no automatic cleaning performed. Rather, notices are sent to the
district courts and it is left to them to correct the data.

We assessed the reliability of the respective bankruptcy and CSE data by
reviewing existing information about these data and the systems that
produced them, interviewing agency officials knowledgeable about these
data, and performing electronic testing. Because of OCSE's legal concerns,
we agreed that they would not provide us with child support case data.
Instead, they performed the test match of the bankruptcy data and national
CSE data themselves to meet certain specifications we provided, and
included some information to allow us to assess the work performed. If we
are not provided with underlying data, the ability to conduct electronic
testing as a part of the data reliability assessment is limited. For
analyses such as these, electronic testing of the data is generally a
routine part of the reliability assessment. However, based on interviews
of knowledgeable officials and reviews of relevant documentation, and
because OCSE routinely performs SSN checks with the Social Security
Administration, we have sufficient reason to believe that the OCSE data
are reliable for the purpose of this report. In preparation for matching,
we eliminated duplicate SSNs from the data within each bankruptcy chapter,
which brought our total to 630,075 individuals who filed for bankruptcy.
This total double-counts the 1,538 individuals who filed for both Chapter
7 and Chapter 13 bankruptcy.

To help determine the potential benefits of data matching on a routine
basis, we conducted a match ourselves of national bankruptcy filings with
CSE data in Texas to ascertain whether bankruptcy filers volunteered their
child support obligations when they file for bankruptcy. Among the six
states we contacted, Texas was readily able to provide us with an extract
of their child support caseload. Our universe totaled 1,931 individuals,
which included noncustodial parents with child support orders who were
participating in the Texas CSE program at some point between October 17,
2005, and October 17, 2006, and who filed for bankruptcy between October
17, 2005, and October 17, 2006. From this universe, we then selected a
simple random probability sample of 100 noncustodial parents.^1 With this
probability sample, each member of the study population had a nonzero
probability of being included, and that probability could be computed for
any member. Each sample element was subsequently weighted in the analysis
to account statistically for all the members of the population, including
those who were not selected.

Because we followed a probability procedure based on random selections,
our sample is only one of a large number of samples that we might have
drawn. Since each sample could have provided different estimates, we
express our confidence in the precision of our particular sample's results
as a 95 percent confidence interval. This is the interval that would
contain the actual population value for 95 percent of the samples we could
have drawn. As a result, we are 95 percent confident that the interval
ranging from less than 1 percent to over 7 percent would contain the true
percentages of our sample population who completed all of their bankruptcy
paperwork and had not reported their child support obligations.

To conduct our review of the bankruptcy case files for the Texas sample,
we developed a data collection instrument to gather information
systematically from the selected bankruptcy files and used the
Administrative Office's electronic public access service to review all
bankruptcy filings and to record whether the child support obligation was
reported in the bankruptcy paperwork. Bankruptcy filers (and their
attorneys) can report these obligations in a number of places in the
paperwork. We did not determine whether the individuals who neglected to
report their obligations eventually did so when asked by a case trustee.
The results of this case file review cannot be generalized nationwide;
however, they can be generalized to the population of 1,931 noncustodial
parents with IV-D orders on record in the automated system of the Texas
State CSE program who also filed for bankruptcy nationwide and are
intended for illustrative purposes. Moreover, it is possible that we
identified some individuals as non-reporters due to a timing issue rather
than their not disclosing a current obligation. While we attempted to
match the time frames of the bankruptcy and child support data as closely
as possible, it is possible that an individual's child support status on
the exact date they filed for bankruptcy might not have been captured in
our data match. We determined that this timing issue was not a significant
methodological limitation because we found so few filers that did not
report their child support obligations.

^1 For our analysis, we included only 94 of the 100 bankruptcy filers with
obligations who completed all of the required bankruptcy paperwork.

To help us understand the potential benefits as well as the feasibility
and cost of data matching on a routine basis, we interviewed officials in
both the bankruptcy system and the CSE program, including officials
representing federal, regional, and state entities. In interviews with
these officials, we also discussed challenges that data matching would
involve for all parties, including technical, legal, financial, and
security challenges that data matching would entail for all parties. We
spoke with officials in the Administrative Office, the Executive Office
for U.S. Trustees, and OCSE. We also interviewed officials at state
agencies in Alabama, California, Illinois, New York, Texas, and West
Virginia. We chose these six states for their diverse geography, caseload
sizes, and administrative structures. Our work at the six state agencies
focused on the notices they receive from case trustees under the new DSO
provisions of the Bankruptcy Reform Act rather than the notices they
receive from bankruptcy courts under the more general requirement that all
creditors specified in bankruptcy filings are to be notified by the
courts. Additionally, we interviewed 5 regional U.S. Trustees and 1
bankruptcy administrator in Alabama and the 16 case trustees who report to
them in bankruptcy districts in these six states.

We conducted this performance audit from December 2006 to January 2008
with generally accepted government auditing standards. Those standards
require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions
based on our audit objectives.

Appendix II: Comments from the Department of Justice

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Kay E. Brown (202) 512-7215 or [33][email protected]

Acknowledgments

In addition to the contact named above, Denise M. Fantone, Acting
Director; Gale Harris, Assistant Director; James Whitcomb,
Analyst-in-Charge; Susan Higgins; and Sara Pelton made significant
contributions to this report. In addition, Ron La Due Lake, Cynthia Grant,
and John "Chris" Martin provided assistance in data collection and
analytical support; Linda Watson, Ellen Wolfe, and Jessikah Foulk provided
assistance in data collection; Susan Bernstein provided writing
assistance; Jim Rebbe and Geoff Hamilton provided legal assistance; and
Lise Levie provided technical assistance.

(130614)

To view the full product, including the scope
and methodology, click on [34]GAO-08-100 .

For more information, contact Kay E. Brown at (202) 512-7215 or
[email protected].

Highlights of [35]GAO-08-100 , a report to congressional committees

January 2008

BANKRUPTCY AND CHILDSUPPORT ENFORCEMENT

Improved Information Sharing Possible without Routine Data Matching

Nationwide, about 7 percentof individuals who filed for bankruptcy between
October 17, 2005, and October 17, 2006--the first year of the bankruptcy
act implementation--were noncustodial parents with child support orders.
They, in turn, represented about one-half of 1 percent of the 9.9 million
noncustodial parents with orders to pay child support. While these
proportions are small, they represented 45,346 adults and at least as many
children.

Routine data matching might identify individuals who have not reported
their child support obligations. However, GAO estimated from a random
sample file review that 98 percent of noncustodial parents nationwide with
orders in Texas had volunteered this information when they filed. (The
results could be higher or lower in other states.) Another potential
benefit would be to reduce the workload for state child support agencies
by providing positive identification of bankruptcy filers with orders
under the states' purview by comparing the full social security numbers
(SSNs) of individuals in both bankruptcy and child support databases. This
would help address the current situation state agency officials described,
in which significant numbers of the notices they receive from bankruptcy
trustees included only partial SSNs of the named person, imposing
additional work on staff to make a positive identification in their
databases. For bankruptcy case trustees participating in the U.S. Trustee
Program, we found this to be the case, even though program
guidance--covering 84 of the 90 bankruptcy districts--calls for case
trustees to provide full SSNs in notices sent to state agencies. These
notices are not part of any public record and trustee program officials
said this use of the full SSNs is consistent with executive branch
policies designed to guard privacy. For the remaining six districts,
administered under a separate program, no guidance has been developed.

A data matching system is technically feasible, but it would be a complex
and costly undertaking, and would involve addressing some statutory and
policy considerations. Regarding notifying state agencies of the match
results, federal child support enforcement officials said that their
national automated system could disseminate this data after modifications
to federal and state systems. However, a data matching system would not
offer a comprehensive alternative to the trustee notification system,
because it would not transmit information to custodial parents. Regarding
cost, bankruptcy and child support enforcement officials said that the
development and implementation of an automated interface between two
separate databases is a complex and costly undertaking, requiring
modifications to each, with many steps required to assure that the
matching system is developed and deployed without critical flaws and
allowing for the secure exchange of data. Also, bankruptcy officials cited
some statutory and policy considerations to releasing their own data or to
performing a data match. It would also duplicate a portion of the current
trustee notification process. In view of these findings, instituting a
data matching system may not be warranted, especially if the case trustees
can provide full SSNs of bankruptcy filers when notifying state agencies.

Recognizing the importance of child support, the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 requires that if a parent
with child support obligations files for bankruptcy, a bankruptcy trustee
must notify the relevant custodial parent and state child support
enforcement agency so that they may participate in the case. The act also
required GAO to study the feasibility of matching bankruptcy records with
child support records to assure that filers with child support obligations
are identified. GAO therefore (1) identified the percent of bankruptcy
filers with obligations nationwide, (2) examined the potential for routine
data matching to facilitate the identification of filers with child
support obligations, and (3) studied the feasibility and cost of doing so.

GAO interviewed child support enforcement and bankruptcy officials at the
federal level and in six states. GAO also conducted a nationwide test data
match and reviewed national bankruptcy filings for people with support
obligations in Texas for an indication of whether filers are failing to
provide this information.

[36]What GAO Recommends

To improve the current trustee notification system, the executive and
judicial branch entities responsible for bankruptcy case trustees should
take steps to address the needs of state agencies for full SSNs to better
identify bankruptcy filers; these entities agreed.

References

Visible links
  28. http://www.gao.gov/cgi-bin/getrpt?GAO-05-1016T
  29. http://www.gao.gov/cgi-bin/getrpt?GAO-07-752
  30. http://www.gao.gov/cgi-bin/getrpt?GAO-01-67
  31. http://www.gao.gov/cgi-bin/getrpt?GAO-05-998T
  32. http://www.gao.gov/cgi-bin/getrpt?GAO-04-615
  33. file:///home/webmaster/infomgt/d08100.htm#mailto:[email protected]
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-08-100
  35. http://www.gao.gov/cgi-bin/getrpt?GAO-08-100
*** End of document. ***